International Business : Reading Tea Leaves in China: Start-Up Sees Grounds for Coffee : Entrepreneurs: Two Americans are part of a small firm out to bring the world’s most populous nation a good cup of home brew.

Persuading a billion Chinese tea drinkers to set aside the habit of a few millennia in favor of a thick and bitter-tasting foreign brew called coffee was a challenge Stuart Eunson could not let pass.

When the inveterate coffee drinker found himself a student in China, Eunson, now 25, saw an immediate market.

To exploit it, he and two like-minded friends established their own company, Arabica Roasters. This month, they will import their first shipment of coffee beans to blend, roast and sell in Beijing.

The average Chinese, according to coffee industry figures, drinks about 1,500 cups of tea a year.

Until recently, it was a rare Chinese indeed who began his day with a cup of steaming, home-ground, home-brewed java.

But now, according to Eunson, at least 1% of Beijing’s 11 million people are doing just that, using their own coffee-making equipment such as plungers, percolators and grinders.

“The potential of the Chinese market is very good (because) coffee is an inexpensive indulgence,” said Eunson, who hails from Princeton, Mass.

It was at Colby College in Maine that Eunson met his business partner, Ronald Thompson, 26, of Bethlehem, Pa.

After graduation, Thompson set off for Beijing, where his work with a law firm gave him the knowledge needed for setting up and running a wholly-owned company in China.

Two years later, Eunson followed Thompson to Beijing, where they teamed up with Australian Richard Wilson to form Arabica.

The new company saw a good cup of coffee as being among the many necessities in the world’s most populous nation.

The members of China’s emerging generation of coffee drinkers probably buy about 44 pounds of coffee beans a year, Eunson said, representing potential annual sales of 3.08 million pounds in Beijing alone.

“The Chinese are starting to drink more and more coffee on a daily basis,” he said. “There are a lot of people in Beijing now who regularly drink coffee, and at least 1% of the population would drink at least one cup a day.”

Coffee has not always been an alien beverage to the Chinese. A coffee culture existed before the revolution of 1949 in cities with a history of Western contact, such as Shanghai and Guangzhou, but it disappeared very quickly after the unrest.

As China has opened up once more over the past 16 years to outside cultural influences, coffee has become associated with a modern, Western lifestyle.

Cafes are again becoming popular meeting places in Shanghai and Guangzhou, and a few have even opened up in the more conservative cities to the north.

However, industry pundits say most coffee products are still purchased as gifts, and creating a coffee habit is no easy task.

Nestle, the Swiss food conglomerate whose mainstay is instant coffee, left China in 1952 and didn’t return until 1985, when it found little or no market for its coffee products.

The most popular way to buy such brands as Nescafe and Maxwell House in China is in a red-and-gold box containing a jar of instant coffee, a jar of powdered creamer and a spoon emblazoned with the brand name.

Figures show that in 1992, Chinese bought about $70 million worth of instant coffee.

Eunson believes that once the Chinese understand the difference between instant coffee and coffee brewed from freshly roasted beans, market growth will be exponential.

China does grow its own coffee--about 5,000 tons a year in the tropical southern provinces of Yunnan and Hainan Island--and in 1992 it exported 2,645 pounds to Japan, Italy, Hong Kong and Taiwan.

About half the coffee grown in the country comes from a United Nations Development Program project in Yunnan. According to official news reports, the project received export orders for 250 tons in the first half of the year.

Eunson said Arabica Roasters will be using a little Yunnan coffee in its blends but that most of the beans will come from Jamaica, Kenya, Colombia, Papua New Guinea, Ethiopia, Puerto Rico, Hawaii, India and Vietnam.

The 50,000 Westerners currently living in Beijing were the company’s initial target, Eunson said.

Coffee in Beijing is priced between 58 cents and $3 a cup, and “that’s not in the foreign hotels,” where inflated prices and service charges often push the price beyond $4 a cup, he said.

He said Arabica’s home-brewed coffee will cost between 20 and 30 cents a cup.